Existing Home Sales Fall Again in April
This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.
Existing home sales measures the monthly sales of previously owned single-family homes. It makes up a huge part of the residential real estate market, as 88% of homes purchased last year were previously-owned homes according to the National Association of Realtors. More importantly, there exists a strong correlation between purchases of existing homes and consumer spending. An increase in existing home sales can indirectly stimulate economic activity with increased consumer spending on new furnishings and appliances. Alternatively, a sustained drop in existing home sales often foreshadows a downturn in the economy.
The Latest Data
This morning's release of the April existing home sales showed that sales continued to fall for a second straight month to a seasonally adjusted annual rate of 4.28 million units from the previous month's 4.43 million. The latest number represents a 3.4% month-over-month decrease and was well below the forecast of a 0.1% increase in sales. Existing home sales are now down 23.2% compared to one year ago.
Here is an excerpt from today's report from the National Association of Realtors.
WASHINGTON (May 18, 2023) – Existing-home sales decreased in April, according to the National Association of REALTORS®. All four major U.S. regions registered month-over-month and year-over-year sales declines.
Total existing-home sales1 – completed transactions that include single-family homes, townhomes, condominiums and co-ops – slid 3.4% from March to a seasonally adjusted annual rate of 4.28 million in April. Year-over-year, sales slumped 23.2% (down from 5.57 million in April 2022).
"Home sales are bouncing back and forth but remain above recent cyclical lows," said NAR Chief Economist Lawrence Yun. "The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand." [Full Report]
Here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available for the last twelve months.
Over this time frame, we clearly see the real estate bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the great recession with monthly sales as low as 3.45 million units to as high as 5.44 million units. We have seen that same volatility following the most recent recession, with sales ranging between 4.00 million units to 6.73 million units.